Future value analytics

ABSTRACT

A method for assessing the performance of a company includes: receiving financial data about the company; determining a future value of the company; decomposing the future value into a plurality of future value components, where the plurality of future value components includes an economy component that defines an implied amount of growth of the company attributable to the growth of the economy in general; and displaying at least one of the future value components.

RELATED APPLICATIONS

This is a continuation application of U.S. patent application Ser. No.11/072,895, filed Mar. 2, 2005, which is incorporated herein byreference in its entirety.

COPYRIGHT NOTICE

A portion of the disclosure of this patent document contains materialwhich is subject to copyright protection. The copyright owner has noobjection to the facsimile reproduction by anyone of the patent documentor the patent disclosure, as it appears in the Patent and TrademarkOffice patent file or records, but otherwise reserves all copyrightrights whatsoever. The following notice applies to any software and dataas described below and in the drawings hereto: Copyright© 2005,Accenture, All Rights Reserved.

BACKGROUND

1. Technical Field

The present invention relates generally to business performancemanagement, and more particularly to a system and method for evaluatinga company's performance based on the decomposition and mapping of totalreturn to shareholders.

2. Background Information

Business performance management (BPM), also known as Enterpriseperformance management (EPM), relates to the execution and monitoring ofthe performance of various components of a company's business. BPM,sometimes referred to as the next generation of business intelligence(BI), focuses on business processes such as planning and forecasting andhelps businesses discover efficient use of their business units,financial, human, and material resources. Typically, BPM systemsconsolidate data from various sources, and provide functions forquerying and analyzing the data and putting the results into practice.

BPM enhances business processes by creating better feedback loops thatallow for the continuous, real-time review of information to helpidentify and eliminate problems before they grow. For example,forecasting capabilities may help the company take corrective action intime to meet earnings projections. BPM may also be useful in riskanalysis and predicting outcomes of merger and acquisition scenarios, aswell as planning to overcome potential problems.

BPM provides key performance indicators (KPI), also know as performancemetrics or variables, that help companies monitor efficiency of projectsand employees against operational targets. These metrics/KPI may be usedto assess the present state of the business and to prescribe a course ofaction. For example, BPM systems have been used to analyze: Newcustomers acquired; Status of existing customers; Attrition ofcustomers; Turnover generated by segments of the Customers; Outstandingbalances held by segments of customers and terms of payment; Collectionof bad debts within customer relationships; Demographic analysis ofindividuals (potential customers) applying to become customers, and thelevels of approval, rejections and pending numbers; Delinquency analysisof customers behind on payments; and Profitability of customers bydemographic segments and segmentation of customers by profitability.Regardless of the type of analysis a BPM system may be used for, BPMsystems must acquire metric/KPI that is consistent, correct, and timelyavailable.

Despite the great benefits many BPM systems provide, these systems areonly as powerful as the metrics/KPI used to benchmark businessperformance. Unfortunately, there is a disconnect in traditional BPMsystems between the financial performance metrics companies use inanalyzing business performance and the ability to create and sustainhigh performance results in their execution over time. This disconnectarises because most companies take an internal approach to evaluatingtheir business performance using performance metrics such as Earningsper Share (EPS), Return on Net Assets (RONA), Earnings Before Interest,Taxes, Depreciation, and Amortization (EBITDA), Return on InvestmentCapital (ROIC), Economic Value Added (EVA), Cash Flow Return onInvestment (CFROI), and the like. These metrics neglect the true driversof sustainable shareholder value and instead only determine theoperating performance for the current operating year. Essentially, thesemetrics only provide analysis of a company's current value, or thepresent value of the uniform perpetual earnings on assets currently heldby the company.

This disconnect becomes even more apparent when analyzing companies suchas biotech companies with a high percentage of future value, or thepresent value of company opportunities for investments in real assetsthat will yield more than the normal market rate of return. For example,traditional value management focuses on Net Operating Profit LessAdjusted Taxes (NOPLAT) as the only source of “Return” on InvestedCapital. Because high future value firms have little or no NOPLAT, thereis no accounting for the value created by these types of companies.

Companies attempt to solve this disconnect through the implementation ofmajor new transactional systems or point solutions to specific problems,such as ERP systems and data warehouses. Although these solutions aregood at tracking transactional data, they do not help a company plan forwhat may occur and track the key drivers to enable decision making.Point solutions are band-aides that don't address the real problem ofproactively managing those aspects of business performance thatcontribute to sustainable shareholder value.

Other companies address the current problems with BPM by implementing aBalanced Scorecard or Executive Dashboard. Exemplary scorecards anddashboards include the Cognos® Metrics Manager and Cognos® Visualizer,provided by Cognos, Inc. of Ottawa, Canada, and the Hyperion PerformanceScorecard, provided by Hyperion Solutions Corporation of Sunnyvale,Calif. These solutions attempt to capture the financial andnon-financial drivers of value for the company. These solutionstypically provide results that are useful and insightful. However, thesesolutions may not be integrated into the remaining BPM systems utilizedby the company, and may not incorporate metrics reflective of the truedrivers of shareholder values.

Accordingly, there is a need for software tools and informationtechnology solutions to create an integrated capability to drive BPMstrategy and value creation that accurately measures the key drivers ofboth current and future value from an external perspective as well asdetail how these drivers interrelate.

BRIEF SUMMARY

In one aspect, a method for assessing the performance of a company isprovided. The method may include receiving financial data about thecompany and determining a future value of the company. Next, the futurevalue is decomposed into a plurality of future value components, wherethe plurality of future value components includes an economy componentthat defines an implied amount of growth of the company attributable tothe growth of the economy in general. Finally, the method may includedisplaying at least one of the future value components to advise a userof the performance of the company relative to the economy in general.

In another embodiment, a computer-implemented method for analyzing therelative performance of a business unit of a company is provided. Themethod may include: receiving publicly available historical financialdata forecast financial data in an electronic readable format about aplurality of business units from a data source and a Gross DomesticProduct (GDP) value indicative of the GDP for a country; calculatingwith a data processor a plurality of ratios of financial performancemeasures based on the received financial data, wherein at least one ofthe plurality of performance ratios comprises a decomposition of thefuture value of a company; selecting a business unit from the pluralityof business units and generating a plurality of data points based on thereceived data and calculated performance measures for the selectedbusiness unit; displaying the plurality of data points on a graph; anddepicting on the graph an indicia indicative of a GDP breakeven lineassociated with an implied amount of growth of the companiesattributable to the growth of the economy in general and based on theGDP value.

These and other embodiments and aspects of the invention are describedwith reference to the noted Figures and the below detailed descriptionof the preferred embodiments.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1A is a diagram representative of an exemplary system forimplementing one embodiment;

FIG. 1B is a diagram representative of an exemplary architecture for aBPM system;

FIG. 2 is a diagram representative of an exemplary EPM technicalarchitecture for implementing one embodiment;

FIG. 3 is a diagram representative of an exemplary framework fordelivering an integrated BPM system;

FIG. 4A is a diagram representative of one embodiment of a Total Returnto Shareholder (TRS) map depicting exemplary interrelations betweeninternal and external business metrics;

FIG. 4B is a diagram representative of a second embodiment of a TRS mapdepicting exemplary interrelations between internal and externalbusiness metrics;

FIG. 4C is a diagram representative of a third embodiment of a TRS mapdepicting exemplary interrelations between internal and externalbusiness metrics;

FIG. 5A is a diagram representative of a computer display of a firstpart of an exemplary calculation worksheet;

FIG. 5B is a diagram representative of a computer display of second partof an exemplary calculation of Total Economic Profit (TEP);

FIG. 6 is a diagram representative of an TRS calculation using the TEPperformance metric;

FIG. 7 is an exemplary comprehensive performance analysis tool;

FIG. 8 is an exemplary Future Value (FV) visualization for the analysistool of FIG. 7;

FIG. 9 is another exemplary FV visualization for the analysis tool ofFIG. 7;

FIG. 10 is another exemplary FV visualization for the analysis tool ofFIG. 7;

FIG. 11 is another exemplary FV visualization for the analysis tool ofFIG. 7;

FIG. 12 is an exemplary additional visualization for the analysis toolof FIG. 7;

FIG. 13 is another exemplary additional visualization for the analysistool of FIG. 7;

FIG. 14 is another exemplary additional visualization for the analysistool of FIG. 7;

FIG. 15 is another exemplary additional visualization for the analysistool of FIG. 7;

FIG. 16 is another exemplary additional visualization for the analysistool of FIG. 7; and

FIG. 17 is another exemplary additional visualization for the analysistool of FIG. 7.

DETAILED DESCRIPTION OF THE DRAWINGS AND THE PRESENTLY PREFERREDEMBODIMENTS

Referring now to the drawings, and initially to FIG. 1, an exemplarysystem for implementing the invention includes a general purposecomputing device in the form of a computing environment 20, including aprocessing unit 32, a system memory 22, and a system bus 38, thatcouples various system components including the system memory 22 to theprocessing unit 32. The processing unit 32 may perform arithmetic, logicand/or control operations by accessing system memory 22. The systemmemory 22 may store information and/or instructions for use incombination with processing unit 32. The system memory 22 may includevolatile and non-volatile memory, such as random access memory (RAM) 24and read only memory (ROM) 30. A basic input/output system (BIOS)containing the basic routines that helps to transfer information betweenelements within the computer environment 20, such as during start-up,may be stored in ROM 30. The system bus 38 may be any of several typesof bus structures including a memory bus or memory controller, aperipheral bus, and a local bus using any of a variety of busarchitectures.

The computing environment 20 may further include a hard disk drive 42for reading from and writing to a hard disk (not shown), and an externaldisk drive 46 for reading from or writing to a removable external disk48. The removable disk may be a magnetic disk for a magnetic disk driveror an optical disk such as a CD ROM for an optical disk drive. The harddisk drive 42 and external disk drive 46 are connected to the system bus38 by a hard disk drive interface 40 and an external disk driveinterface 44, respectively. The drives and their associatedcomputer-readable media provide nonvolatile storage of computer readableinstructions, data structures, program modules and other data for thecomputing environment 20. Although the exemplary environment describedherein employs a hard disk and an external disk 48, it should beappreciated by those skilled in the art that other types of computerreadable media which can store data that is accessible by a computer,such as magnetic cassettes, flash memory cards, random access memories,read only memories, and the like, may also be used in the exemplaryoperating environment.

A number of program modules may be stored on the hard disk, externaldisk 48, ROM 30 or RAM 24, including an operating system (not shown),one or more application programs 26, other program modules (not shown),and program data 28. One such application program may include thefunctionality as detailed below.

A user may enter commands and/or information, as discussed below, intothe computing environment 20 through input devices such as mouse 56 andkeyboard 58. Other input devices (not shown) may include a microphone(or other sensors), joystick, game pad, scanner, or the like. These andother input devices may be connected to the processing unit 32 through aserial port interface 54 that is coupled to the system bus 38, or may becollected by other interfaces, such as a parallel port interface 50,game port or a universal serial bus (USB). Further, information may beprinted using printer 52. The printer 52, and other parallelinput/output devices, may be connected to the processing unit 32 throughparallel port interface 50. A monitor 36, or other type of displaydevice, is also connected to the system bus 38 via an interface, such asa video input/output 34. In addition to the monitor 36, computingenvironment 20 may include other peripheral output devices (not shown),such as speakers or other audible output.

The computing environment 20 may communicate with other electronicdevices such as remote computer 68. Remote computer 68 may be anothercomputing environment such as a server, router, network PC, peer device,telephone (wired or wireless), personal digital assistant, television,or the like. Remote computer 68 may include many or all of the elementsdescribed above relative to the computing environment 20. In oneembodiment, the remote computer 68 is a server coupled with a databaseof historical financial data for a plurality of companies. Herein, thephrase “coupled with” is defined to mean directly connected to orindirectly connected with through one or more intermediate components.Such intermediate components may include both hardware and softwarebased components. Alternatively, or in addition, the remote computer mayinclude accounting and/or financial software for maintaining a company'sinternal recording keeping.

To communicate, the computer environment 20 may operate in a networkedenvironment using connections (wired, wireless or both wired andwireless) to one or more electronic devices. FIG. 1 depicts the computerenvironment networked with remote computer 68 and with information hub150 of a distributed computer system for business performancemanagement, as shown in FIG. 1B. The logical connections depicted inFIG. 1 include a local area network (LAN) 64 and a wide area network(WAN) 66. Such networking environments are commonplace in offices,enterprise-wide computer networks, intranets and the Internet.

When used in a LAN networking environment, the computing environment 20may be connected to the LAN 64 through a network I/O 62. When used in aWAN networking environment, the computing environment 20 may include amodem 60 or other means for establishing communications over the WAN 66,The modem 60, which may be internal or external to computing environment20, is connected to the system bus 38 via the serial port interface 54.In a networked environment, program modules depicted relative to thecomputing environment 20, or portions thereof, may be stored in a remotememory storage device resident on or accessible to remote computer 68.It will be appreciated that the network connections shown are exemplaryand other means of establishing a communications link between theelectronic devices may be used.

The new business performance management system and method is typicallyprovided as software running on the processing unit 32, resident in thecomputer-readable medium of the storage device 42, to allow theprocessing unit 32 to provide the functionalities described herein. Asdescribed below, the software may be provided as a spreadsheet, forexample as implemented on a spreadsheet program such as Microsoft Excel,however one skilled in the art would realize that the software may beprovided as a stand-alone software program (i.e., implemented in anysuitable programming language) operating on the processing unit 32 orany operating system provided therewith, and need not utilize anyadditional software operating on the system. Alternatively, or inaddition, the functionalities may be provided as a combination ofsoftware and one or more ASICs to provide the functionalities discussedherein.

In further embodiments, as described below, the functionalities may alsobe provided as a web-based application running on a browser andaccessible via the Internet or other communications network.Alternatively, the functionalities disclosed herein may be incorporatedinto an Executive Dashboard, described above. In yet another embodiment,the functionalities disclosed herein may be provided as a benchmarkingservice that analyzes historical data for a plurality of companies. Thehistorical data may reside in a remote database, or may be internal tothe benchmarking service. The benchmarking service may provide industryspecific data and comparative benchmarks for particular industries, orprovide general benchmarks that span multiple industries. In oneembodiment, the functionalities are embedded into the architecture of aBPM management system via an information hub 150.

An exemplary BPM architecture 100 is shown in FIG. 1B. The architecture100 may include various source systems 102, reference data 110,applications 120, and reporting and analysis tools 130 integrated by aninformation hub 150 that may provide support for collaboration ofbusiness units, workflow process management, security, and systemadministration. The source systems 102 may capture information about thecompany from various data sources 104 via various methods 106. Exemplarydata sources 104 may include Enterprise Resource Planning systems (ERP),which are integrated information system that uses packaged software toserve any or all departments within an enterprise. For example, ERPsystems may provide software for manufacturing, order entry, accountsreceivable and payable, general ledger, purchasing, warehousing,transportation and human resources departments. Additional exemplarydata sources 104 may include legacy systems as well as non-financial andexternal sources of data, and the like. Exemplary methods 106 formanaging data from the data sources 104 may include Extraction,Transformation and Loading (ETL), which may be used copy data betweendatabases of different types, Enterprise Application Integration (EAI),which may be used to integrate applications within the company,Enterprise Intelligence Integration (EII, also known as EnterpriseInformation Integration), which may aggregate disparate sources 104 ofbusiness information into a single analyzable body of information, andthe like.

The architecture 100 may also include reference data 110 that may definevarious definitions, standards, and the like. For example, the companymay reference certain KPI definitions 112, reporting hierarchies 114,data standards 116, and code of authorities 118. Applications 120 mayalso be included to provide strategic analysis in areas such asplanning/modeling 122, budgeting/forecasting 124, consolidations 126,and dimensional profitability/ABC 128. Finally, reporting and analysistools 130 may also be provided to present the analytical results tobusiness managers via useful reports, visualizations, and the like.Traditional BPM systems may provide, for example, reporting tools forexternal reporting 132, internal reporting 134, and standard reporting136. Additionally, or alternatively, tools may be provided for ad hocdatabase querying 138, such as OnLine Analytical Processing (OLAP)software that allows the user to quickly analyze information that hasbeen summarized into multidimensional views and hierarchies, executivescoreboards or dashboards 140, data mining tools 142, and the like. Itshould be apparent to one of ordinary skill in the art, that the sourcesystems 100, reference data 110, applications 120, reporting andanalysis tools 140, and information hub 150 capabilities necessary for aparticular company may be implementation dependent, and that exactcombination of tools provided may vary greatly without departing fromthe spirit and scope of the present invention.

Referring to FIG. 2, an exemplary framework 200 for delivering anintegrated BPM system is shown. The framework 200 defines a process todrive strategy through to execution, with results informing periodicadjustments to both long and short term business tactics. The frameworkincludes strategic planning 210, creating a business plan and targetsetting 220, managing operations 230, monitoring results 240, andenablers 250. The framework 200 also allows each of these areas to adapt260 as results indicate. Exemplary strategic planning 210 tasks includeenvironmental assessment, competitor assessment, analysis of businessopportunities and key capabilities, and long-range financial planning.Exemplary tasks associated with business planning and targeted setting220 include establishing a direction for products and services,determining the required capabilities, key initiatives, and determiningrevenue, cost and capital projections as well as budget and operationaltargets. Exemplary operational 230 tasks include setting operationaltargets, and managing initiatives, revenues, costs and capital.Exemplary monitoring 240 tasks include analyzing the prior period,forecasting, operational analysis, and dimensional analysis. Exemplaryenablers 250 include employee incentives and rewards, and companypolicies and procedures.

Referring to FIG. 3, an exemplary methodology for implementing the BPMframework of FIG. 2 is shown. As described above, current methodologiesfocus exclusively on internal performance metrics and current yearperformance. When utilizing the functionality described below, however,the framework 300 provides a holistic approach to BPM that allows acompany to manage business performance across various aspects of itsoperations and at different levels. For example, a company may want tomanage the performance of their business as it effects the company'scurrent value 370, future value 372, financing 374 or TRS value 376,described in more detail below. Alternatively or additionally, thecompany may wish to see its performance across any of these areas inabsolute or relative terms 378, such as raw number analysis, marketindices or peer group assessments, respectively. The framework 300represents the continuous process of strategic planning 310, targetsetting and business plan development 320, operating 330, and monitoringperformance 340 as supported by various enablers 350. An exemplarymethodology for strategic planning 310 includes refining corporatevision and strategic objectives 312, determining key value drivers 314,and determining key measures of success 316 activities. Thefunctionalities disclosed herein may find particular use in thestrategic planning 310 phase when refining the corporate vision andstrategic objectives 312, for example, when analyzing investorexpectations, key competitor information and current and future businessperformance. Similarly, the functionalities disclosed herein may be usedto determine the key value drivers 314, for example, by providing amapping of the value drivers to various performance metrics, and fordetermining the key measures of success 316, for example, by aligningthose measures with shareholder value creation to create cause andeffect maps.

An exemplary methodology for target setting and business plandevelopment 320 includes portfolio value assessment 322, set targets forkey measures of accountability 324, and cascade targets to lower levelmetrics/organization 326 activities. As described in more detail below,the functionalities disclosed herein may find particular use in settingtargets for key measures of accountability 324, for example, by aligningtop down targets with shareholder expectations and ensuring theconsistency of external and internal targets. Similarly, thefunctionalities disclosed herein are ideally suited to cascade thetargets to lower level metrics 326.

Exemplary methodology activities for operations 330 include developingplans to achieve the specified targets 332, allocating resources (interms of both capital and man-power) to achieve all business plans 334,and reviewing, challenging, and finalizing plans and forecasts 336. Thefunctionalities disclosed herein facilitate each of these activities332, 334, and 336 by providing a clear mapping of target values tobusiness and operational drivers to enable bottom-up resource allocationin line with the established target values.

An exemplary methodology for monitoring performance 340 includesactivities for closing and consolidating books and reporting actuals342, monitoring key measures of business performance 344, reviewingperformance with executive management 346, and developing action plans,re-allocating resources and updating forecasts. The functionalitiesdisclosed herein facilitate performance monitoring 340 by providing aconsistent system for measuring the performance of the company and asimple user interface to determine exceptions and root causes of poorperformance. Coupling these functionalities with a balanced scorecard orexecutive dashboard, as mentioned-above, further enhance theseadvantages.

Finally, exemplary methodology activities for enablers 350 includeestablishing, analyzing, and adapting employee incentive and rewardsprograms 352 and policies and procedures 354, and providing anintegrated IT architecture 356, such as the architecture 100 describeabove in reference to FIG. 1B, or other software solution projects thatutilizes an effective set of common data structures 358 and controls360.

In order to overcome the disadvantages of the prior art BPM systems, thefinancial performance metrics used to analyze a company's businessperformance should take an external view of the company's current andfuture value. One such external performance metric is the Total Returnto Shareholders (TRS), and is defined as the company's equity plus anydividends paid on the stock. TRS can be calculated for a givenshareholder by adding dividends to any stock price appreciation anddividing the resultant value by the shareholder's original investment.Coupling the external metric TRS with internal metrics of performanceallows the company to see exactly what drives shareholder value.

FIG. 4A shows an exemplary flowchart detailing the coupling of TRS withinternal performance metrics and the interrelationships therein, alsoknown as a TRS map 400. As described above, TRS 402 includes dividends404 paid on the stock as well as the company's market value of equity orMVE 406. MVE 406 can be calculated by shares outstanding times shareprice. A company's debt 408 to equity structure influences its WeightedAverage Cost of Capital 410 (WACC). The total market value of thecompany (MV) may be defined as the MVE 406 plus the market value of thedebt 408.

Enterprise Value (EV) 412 (EV=MV less excess cash 411) can be decomposedinto Current Value 414 (CV) and Future Value 416 (FV). The CV 414represents the current value of the company. The CV 414 is influenced bythe company's Net Operating Profits Less Adjusted Taxes 418 (NOPLAT),capital 420, and WACC 410, and can be calculated by dividing the NOPLAT418 by the WACC 410 (which is also equal to Capital 420+EP/WACC 410),such that CV 414=NOPLAT 418/WACC 410=Capital 420+EP/WACC 410. The FV 416represents the future value of the company, or the difference betweenthe EV 412 and the CV 414. The FV 416 is influenced by capital 420 andthe WACC 410, and can be calculated by subtracting the CV 414 from theEV 412, such that FV=EV−CV. As further detail in FIG. 4A, the capital420 includes both balance sheet 424 and off-balance sheet 426components. Additionally, income 422 may influence capital 420 as wellas the NOPLAT 418.

The data underpinning these performance metrics also have an effect onthe cash flow 434 of the company. Cash flow 434 is determined by theinvestments 428 made in the company, any financing arrangements 430, aswell as operations 432 results. The operations 432 results areinfluenced by the NOPLAT 418 and the capital 420. Financing arrangements430 influence the equity 406 of the company, its debt 408, and theability of the company to pay dividends 404. This may affect thedecision of investors to make an investment 428 in the company, whichmay affect the NOPLAT 418, capital 420 and Mergers and Acquisitions 436(M & A) of the company.

FIG. 4B depicts an alternative embodiment of the TRS map 400. In theembodiment of FIG. 4B, the FV 416 may be further broken down intocomponent parts via a variety of methods, each of which attempt todefine the true drivers of FV 416. For example, one may use an FVpremium 440 methodology to determine a company's FV 416 growth relativeto the growth of the economy (segment or index) generally. In oneembodiment, the FV premium methodology 440 may decompose the LV 416value into three components: a first component that represents anoperating advantage/disadvantage for the company; a second componentthat defines a projected rate of growth for the economy in general; anda third component that defines the remainder of FV 416 in the company,

In the FV premium methodology 440, the first component may represent anoperating advantage/disadvantage for the company. This component maydefine whether the company is creating or destroying value in thecurrent period, and may be calculated, for example, by calculating acompany's economic profit (EP) capitalized (EP/WACC). As described inmore detail below, EP may be calculated as a company's NOPLAT less acapital charge for the company, where the capital charge may be definedas a company's invested capital times a WACC for the company, such thatEP=NOPLAT−(Invested Capital*WACC). If this value is negative, thecompany is operating at a disadvantage and is destroying the value ofcapital entrusted to the company. If this value is positive, the companyis operating at an advantage and has generated a premium over the valueof capital that is embedded in the company's CV 414. This firstcomponent thus defines the portion of LV 416 explained by investor'sexpected improvement to breakeven EP.

The second component of the LV premium methodology 440 may define animplied growth of the economy in general. It should be apparent to oneof ordinary skill in the art that this component may also define animplied growth rate for a particular market, market segment, industry,peer group, and the like. Additionally, this component may be determinedusing a variety of methods, each of which may be dependent on themarket, market segment, etc. being analyzed. In one embodiment, thesecond component may represent an implied growth in the economy asdetermined by a terminal value calculation based on the US GrossDomestic Product (GDP). Typically, the terminal value of a perpetuallygrowing firm may be defined as the Free Cash Flow of a company for thenext period divided by WACC minus a terminal growth rate, orFCF_(t+1)/(WACC−g). By substituting a breakeven NOPLAT value, or thepoint at which zero EP is being generated, for the Free Cash Flow of thecompany (FTF_(t+1)) and the historical growth rate of the US GDP for theterminal growth rate (g), one can determine that portion of a company'sFV 416 implied by the growth rate of the economy. In one embodiment, thebreakeven NOPLAT may be defined as a company's invested capital timesWACC, such that the portion of a company's FV 416 attributable to theimplied growth of the economy may be calculated by the followingequation: (Invested Capital* WACC)/(WACC−g). An exemplary growth ratefor the US GDP is 3.41%, adjusted for inflation.

The third component, or the FV premium component, of the FV premiummethodology 440 includes the remainder of any FV 416 not explained bythe first two components, or the FV 416 of the company minus thatportion of FV 416 explained by the implied growth of economy minus anyFV 416 explained by an operating disadvantage. For companies operatingat an advantage, the FV premium component may be defined as the FV 416of the company minus that portion of FV 416 explained by the impliedgrowth of economy, A positive FV premium component indicates that thecompany is outperforming the economy, market sector, industry, or thelike, while a negative FV premium component indicates a growth ratebelow what is to be expected. Various visualizations incorporating thealgorithms and components of the FV premium methodology 440 aredescribed in more detail below in reference to FIGS. 7-17.

Alternatively, or additionally, other methodologies may be used tofurther analyze the FV 416 of a company. Exemplary methodologies includea SEER© methodology 442 that defines the drivers of FV 416, an assetmethodology 444 that breaks down FV 416 by each company asset thatdrives FV 416, and an FV multiples methodology that analyzes a companiesinvestments in the drivers of FV 416 to suggest investment strategiesthat may maximize FV 416. Each of these methodologies is described inmore detail in U.S. Patent Publication No. 2005/0209942 entitled “FutureValue Drivers,” to John J. Ballow et al., filed on Mar. 2, 2005, theentire disclosure of which is hereby incorporated by reference.

Referring now to FIG. 4C, an exemplary visualization for displaying aTRS map 400 is shown. In the embodiment of FIG. 4C, a bar graph is usedto visually convey the various components of a TRS map 400 to a user,and may be used to explain the TRS 402 for a particular period of time.For example, assume a company had a TRS 402 of $14,284 for a givenperiod while paying $1000 in dividends 404 over that same period,resulting in a market value of equity 406 equal to $13,284. Furtherassuming a market value of debt 408 for the company of $9,184, the totalmarket value of the company may be calculated at $22,467. Subtractingany excess cash 411 for the period leaves an enterprise value 412 of$21,731. If the company has an invested capital 420 of $12,276 andEP/WACC of ($2301), it can be calculated that the company's equity value412 includes $9,974 of CV 414 and $11,757 of FV 416. Using the FVpremium methodology 440, one can determine that the various componentsof FV 416 include a first portion 450 of $2,301 based on the expectationthat the company will reach a breakeven economic profit, a secondportion 452 of $8,010 based on an expected growth of the economygenerally, and a third portion 454 of $1,446 which represents anexpectation that the growth of the company will exceed that of theeconomy.

In FIGS. 5A-B an exemplary TRS statement detailing a Total EconomicProfit (TEP) 510 calculation is shown. TEP represents one metric forannualizing and managing current and future value that bridges the gapbetween internal performance metrics and external metrics such as TRS.The TEP 510 of a company may be defined to include economic profitportions attributable to the current year, future value, capitalcharges, financing, and the like, or any combination thereof The TEP 510may be calculated for a given year, such as for tracking historicalperformance 520 of a company, or may be calculated for the enterprise asa whole. Additionally, change percentages 522 for the TEP may also becalculated. In one embodiment, the TEP 510 may also be used for targetsetting 530, described in more detail in U.S. Patent Publication No.2005/0209944 entitled “TRS Target Setting,” to John J. Ballow et al.,filed on Mar. 2, 2005, the entire disclosure of which is herebyincorporated by reference. In the embodiment of FIGS. 5A-B, the TEP 510is calculated by adding an EP 502 component, an invested capital charge504, an EP of FV component 504, and an EP of financing component 504.The EP 502 component defines economic profit for the current value ofthe company for the given period, and may be calculated by multiplyingthe invested capital 540 of a company by its WACC 542 and subtractingthe resultant value from company's NOPLAT 544. The invested capitalcharge 504 may be calculated by multiplying the company's investedcapital 540 by the company's WACC 542. The Economic Profit of FutureValue (EP of FV) 506 represents the economic profit of future valuecomponent 510 and may be calculated by multiplying the FV 546 of thecompany by its WACC 542. Optionally, the EP of finance 508 representsthe portion of EP attributable to the company's financing arrangements.In one embodiment, the EP of finance 508 may be calculated bymultiplying the dividends 548 paid for the period by the total number ofoutstanding shares 550 and dividing the resultant value by the company'sWACC 542, such that the EP of finance 508=(Dividends perShare*Outstanding Shares)*WACC/WACC. Finally, the TEP 510 is calculatedby adding the EP of CV 502, the capital charge 504, the EP of FV 506,and the EP of finance 510, so that the a capitalized change in TEP for agiven period is equal to the TRS for that period.

The TEP can then be used to calculate the TRS for a given year. The TRSchange for a given period can be calculated in dollars by calculatingthe change in TEP for the period (TEP at the end of the period minus TEPat the beginning of the period) and dividing the result by the WACC.Next, any change in debt is subtracted from the resultant value, andfinally the dividends are added, such that the TEP($)=(TEP2−TEP1)/WACC−Change in Debt+Dividends.

These calculations may also be represented as follows:

TRS$=MV2−MV1+Dividends  (Eq. 1)

TRS%=(MV2−MV1+Dividends)/MV1*100   (Eq. 2)

Where MV2 is the market value of equity at the end of the period, MV1 isthe market value of equity at the beginning of the period and dividendsare issued during the period.

EP=NOPLAT−(Capital*WACC)=EP of CV  (Eq. 3)

CV=NOPLAT/WACC=Capital+EP/WACC  (Eq. 4)

MV=Equity+Debt=EV+excess cash=cv+fv+excess cash  (Eq. 5)

EV=equity+Debt−excess cash=mv−excess cash  (Eq. 6)

$\begin{matrix}\begin{matrix}{{FV} = {{EV} - {CV}}} \\{= {{Equity} + {Debt} - {{EP}/{WACC}} - {capital} - {{excess}\mspace{14mu} {cash}}}} \\{= {{Equity} + {Debt} - {{NOPLAT}/{WACC}} - {{excess}\mspace{14mu} {cash}}}}\end{matrix} & \left( {{Eq}.\mspace{14mu} 7} \right)\end{matrix}$

EP of FV=FV*WACC(Decapitalizing Future Value)  (Eq. 8)

TEP=Capital*Wacc+EP of CV+EP of FV+EP of Financing  (Eq. 9)

TRS=(TEP2/WACC2−TEP1/WACC1)−1  (Eq. 10)

Using annual TRS calculations allows a company to set target TRS valuesand decompose the TRS target (or shareholder expected returns) intovalues for Operating Capital and performance (CV), Growth (FV), andFinancing. These additional values can then be further broken down, asdescribed below. Indexing can be used to show performance in absoluteand relative terms.

An exemplary TRS target worksheet using the TEP metric is shown in FIG.6. Although the exemplary TRS worksheet of FIG. 6 contemplates TRStarget setting, it should be apparent to one of ordinary skill in theart that a similar worksheet could be used to track historicalperformance of a company's TRS as well. Initially, a desired growth rate602, dividend payment percentage 604, and debt/equity ratio 606 areestablished. In the example of FIG. 6, the company desires a ten percentgrowth rate 602, a five percent dividend payment 604, and a debt/equityratio 606 of forty percent. Target TRS percentage changes 610 are thenestablished for each of the desired year based on the growth percentage602. Next, the TRS percentage changes 610 are converted to TRS dollaramount changes 612 for each year. The dividend targets 614 arecalculated based on the desired dividend rate 604. Finally, the equity616 and debt 618 values are calculated as a function of the desireddebt/equity ratio 606. As the cost of equity (ke) is embedded in theWACC, setting a TRS target=ke assures meeting investor expectations ie.equity growth at ke.

From these values, the equations described above can be used toestablish target values for additional performance metrics. Theseinclude targets for EV 620, EP of CV 622, FV 624, EP 626, EP of FV 628,and TEP 630. Finally, the annual TRS dollar change 632 can be calculatedas a function of the TEP targets 630 to verify the calculations. Thesetargets can then be decomposed further into targets for the drivers ofeach of these metrics to help the company reach these targets.

As noted above, the decomposition and mapping of the current and futurevalue components of the total return to shareholders along withassociated business processes or business components that drive thosevalues provides valuable software tools for use in analyzing businessperformance and in managing the operation of those business components.As used herein, a business component may be an organizationalsub-division of a company or enterprise. A business component also maybe a business process within an enterprise that may be analyzed as anindependent operation from a financial perspective.

In one embodiment, for example, a software tool may be provided on alaptop computer for use by a business consultant. In person-to-personinterviews with a client, financial data may be input into a computerhaving a spreadsheet programmed to perform the calculations noted above.The spreadsheet may execute the calculations and presently generatereports on the display of the laptop for review by the consultant andclient. The decomposition of shareholder value into component parts maydisplayed in graphical hierarchical maps that provide powerfuldepictions of hypothetical scenarios of the effect that drivers ofbusiness components have on current and future enterprise values.

In another embodiment, the program executing the calculations may beresident on computer-readable medium in a server in communication with aprivately accessible data communication network, such as the internet ora WAN. The program may be accessed through a computer having a browserbased interface to implement the same scenario identified above, orscenarios identified below.

Using the above spreadsheet or similarly programmed software toolimplementing the method of this invention, one may quickly identifybusiness component values that under perform industry benchmarks orcorporate targets. The identified components may be candidates forfurther analysis to determine whether technology solutions may beprovided to raise performance standards and enhance shareholder value.The spreadsheet or other software tool may include a library of standardtechnology solutions associated with each business component. Suchsolutions may be displayed or included in a report generated thatdescribes the identified underperforming component and solutions thatrequire further analysis for implementation to achieve benchmark orother target performance.

In yet another embodiment, the invention may be implemented in anenterprise as part of the business management software. A computer incommunication with the financial accounting system may import financialdata representative of the performance of a plurality of businesscomponents. The financial data may be manipulated to correspond withbusiness components according to a map of business components identifiedas driving current or future value of shareholder returns. The financialdata may then be analyzed in accordance with this invention to determineand display the expected actual shareholder return driven by the actualperformance. Such data may be graphically displayed in a hierarchicalmap, or in the form of an executive dashboard. The actual performancefinancial data may be displayed along side with target values forvarious business component values. Colors, such as green, yellow, orred, for example, may be used to identify the relative performance, suchas above, below, or greatly below target values assigned to individualbusiness components. Additionally, acceptable tolerances for eachbusiness component target value may be established and reflected in thedisplay. Such tools may be useful when integrated as monitoring toolsinto the business performance management frameworks, such as describedin association with FIGS. 2 and 3.

In still another embodiment, the invention may be implemented in theform of a financial data provider. A database containing a historicalstore of financial data of corporation may be in communication on apublicly accessible network. For a fee, financial analysts may accesssuch data and, using the software tools with on their own systems or ona server dedicated to this database, the financial analysts may map thecomponents of shareholder value across broad swaths of industrysegments. Also, the financial analysts may focus on a specific industryto determine industry benchmarks of component values. Those componentbenchmarks may be applied to generate financial report maps used forcomparison purposes in making investment decisions with a specificcompany. Alternatively, the benchmarks may be used for comparison toidentify which business components within a company are underperformingcompetitors, to enable business mangers to determine which businesscomponents require additional resources to maintain competitiveperformance levels.

In an alternative embodiment, the invention may be implemented in theform of target setting, forecasting, and budgeting tools in whichtargets are selected at a high level of management through a process ofstrategic planning to select targets based on a combination of value,such as TRS value for example, expected to be added and manageability ofthe candidate targets. In one embodiment, computer simulations of, interalia, increased cash flows expected by the target strategies. Thesetargets may then be flowed down to the various levels of management,budgets may be constructed around those target strategies, and thebudgets may be consolidated and flowed upward. Alternatively, oradditionally, the system may be used to increase shareholder value byimproving forecasting abilities through the use of graphicalrepresentations of performance metrics of similarly situated companiesin order to identify realistic value enhancing business strategies asgoals for the organization. Exemplary systems of these types includethose described in U.S. Patent Publication Nos. 2004/0073441 A1 and2004/0073477 A1, both to Heyns et al., the entire disclosures of whichare hereby incorporated by reference.

In still another embodiment, the invention may be implemented in asystem for automatically examining a company's financial data andevaluating factors affecting the company's stock value. The system may,for example, evaluate a company's spread through that company's debt andequity costs and measure returns to investors from company growth, whichmay be either organic growth or growth through mergers and acquisitions.The system may also evaluate the financial data of other publicly tradedcompanies, such as those in the same industry, and compares the variousfactors affecting stock value. The system may also include tools fordetermining the return to investors, such as a software-basedapplication that collects receives financial data and uses thisinformation to calculate the return to inventor through the company'sspreads and growth. An exemplary systems of these types include thosedescribed in U.S. Patent Publication Nos. 2005/0004832 A1, to Ostergardet al., the entire disclosure of which is hereby incorporated byreference.

Another aspect of the invention provides comprehensive performanceanalysis of a company's FV, and is illustrated in FIGS. 7-17. Thisembodiment includes a dynamic competitive modeling tool that allows oneto interactively analyze a company's business strategy. The tool issuitable for analyzing the strategic environment of a company orbusiness unit by graphically depicting the historical and forecastedperformance of a company relative to its peers. Preferably the toolincludes a financial model of a company's performance based on thealgorithms and components of the FV premium methodology 440 describedabove. By using the FV premium methodology 440 algorithms, on the onehand, the tool can provide meaningful analysis of FV across an entireindustry to enable a company's management to wisely select a plankeeping FV performance in mind. On the other hand, since the tool relieson publicly reported financial data, the tool can be used by outsideanalysts to benchmark a company's FV performance for evaluatinginvestment decisions.

The tool may also display a company's historical performance metrics andmay embed interactive inputs to permit a user to select any financialmetrics indicative of a company's operational and strategic planning theuser wishes to view. As a default, published forecasts may be used asthe starting point for the analysis. These historical metrics aredynamically tied into the powerful visualization tools to graphicallydepict multiple key performance measures, such as FV premium. The toolhas the capability to graphically depict the performance of selectedpeer companies on the same chart to provide a graphical comparison of FVperformance among industry peers.

As shown in FIG. 7, the system 700 may include a plurality of datasources 710 a-710 n containing financial information, processing logic720 for determining various performance metrics and information from thefinancial data, and a user interface 730 for collecting operator inputs732 a-732 n and displaying various information, such as FVvisualizations 734, customizable visualizations 736, and the like. Eachof these components may be provided individually, or in combination withone another. The user interface 730 may also include navigation tools738 for navigating among the various components of the interface 730,updating or refreshing the visualizations 734 and 736, and the like.

The system may include a server 712 at a financial data provider with alarge data store 714 of the reported financial data and prices ofpublicly traded financial instruments of publicly traded companies inone embodiment. Preferably, the data store contains historical data thatmay be provided or sold to others. The server 712 may be connected to apublicly accessible distributed data network, such as the Internet.Communications with the processing logic 720 may occur over such anetwork

Processing logic 720, which may be maintained by a publicly tradedcompany, is in communication with either the data sources 710 a-710 n,the server 712, or a combination of data sources 710 and servers 712.The processing logic 720 may be implemented as either software orhardware on a single computer or across multiple computers. Theprocessing logic 720 may be in communication with a database 710containing the companies' current and historical accounting andfinancial data. The processing logic 720 may also include modules fordetermining various performance metrics for a business unit associatedwith the company, such as an FV module 722. The business units mayinclude any component of the company for which financial data may besegregated, such as departments, subsidiaries, product lines,geographical regions, product SKUs and the like. In one embodiment, thebusiness units may also include similar information for a competitor ofthe company, such as industry peers. Optionally or alternatively, theserver 712 may be maintained by private investment analysts firms thatanalyze publicly traded companies and provide investment recommendationsfor private investors or the public. In such an embodiment, conventionalperiodic corporate financial reports may be obtained by the processinglogic 720 from those servers 712.

The processing logic 720 may be configured to determine variousperformance metrics and information from the financial information. Suchdeterminations may include calculations based on the received financialinformation as well as selecting metrics or information included in thereceived financial information. Alternatively, or in addition, theprocessing logic may be configured to project performance metrics andinformation from historical information (such as databases of historicalinformation, annual reports, and the like), user inputs 732 a-732 n, orany combination therein. In one embodiment, the processing logic 720 maybe implemented as a series of modules for the individual performancemetrics. Alternatively, each module may be configured to calculatemultiple metrics. In the embodiment of FIG. 7, the processing logic 720includes an FV module 722 for analyzing the FV of a company inaccordance with the FV premium methodology 440 discussed above inreference to FIG. 4B. Preferably, the FV module 722 is configured tocalculate each of the three components of the FV premium methodology440, an operating advantage component, a general economy growth ratecomponent, and an FV premium component, from historic data for each of aplurality of companies, business units, and the like. Alternatively, thealgorithms of the FV premium methodology 440 may be implemented acrossmultiple modules. Alternatively, or additionally, additional modules 724may be provided to calculate additional performance metrics of acompany. Table 1.0 includes performance metrics and information whichmay be determined by the processing logic 720.

TABLE 1.0 Beta Risk Free Rate Market Risk Premium Ke Kd Debt/EquityRatio WACC NOPLAT NOPLAT (Cash Tax Rate) Invested Capital (w/o Goodwill)Invested Capital w/Goodwill Capital Charge Economic Profit Market ValueAdded Current Value Current Value % Current Value w/o Excess CashCurrent Value w/o Excess Cash % Future Value Future Value % Future Valuew/o Excess Cash Future Value w/o Excess Cash % Enterprise ValueEnterprise Value w/o Excess Cash Market Capitalization Total Debt TotalValue Total Investor Fund Book Value Revenue Revenue Growth (Year overYear) Simple Avg of YOY Rev Growth Revenue Growth CAGR (Present Back toYear X + 1) Revenue per Employee Year over Year Growth COGS (w/oDepreciation & Amortization) COGS Margin Gross Margin (D&A not includedin COGS) Gross Income SG&A SG&A Margin EBITA Marginal Taxes on EBITAEBITDA Margin Operating Lease Expense Other Operating ExpensesNon-Operating Expense, Net Retirement Expenses Retirement RelatedLiabilities (RLL) Expense Depreciation & Amortization ExpenseDepreciation Margin Amortization Expense Amortization Margin InterestExpense After Tax Interest Expense Interest Income Interest Income aftertaxes Interest Coverage Ratio Adjusted EBIT EBIT Margin Reported NetIncome Cash Tax Rate on EBITA Cash Taxes on EBITA Deferred Taxes Changein Deferred Taxes Extraordinary Items Minority Interest Adjusted NetIncome Tax Rate After Tax Non-Operating Income After Tax Op Leases AfterTax Retirement Related Liabilities (RLL) Tax on Interest Income Tax onnon-operating Income Tax on Operating Leases Tax Shield on InterestExpense Tax Shield on Retirement-related Liabilities Operating CashExcess Cash and Securities Accounts Receivables Operating Current AssetsOther Operating Assets Other Current Assets Operating Working CapitalInventory Non-Operating Investments Net PPE Net Goodwill CumulativeGoodwill Amortization Accounts Payable Income Taxes Payable Provisionfor Income Taxes Deferred Income Taxes Non-Interest bearing CurrentLiabilities Other Current Liabilities Other Current Liabilities % OtherOperating Liablities Minority Interest Capitalized Value of OperatingLeases Implied Value of Operating Leases Unfunded Retirement LiabilitiesImplied Value of Unfunded Retirement Liabilities AH Interest BearingDebt (including Op. Leases and Ret. Liabs) Net Debt (Includes OperatingLeases) Shareholders Equity Adjusted Equity Breakeven NOPLAT OperatingDisadvantage Operating Advantage Current Value Breakeven TotalExplainable Value Value Explained by Disadvantage Value Explained by Op.Advantage Future Value Explained by GDP Future Value Prime % of FutureValue Explained by Disadv. % of Future Value Explained by GDP FV Prime %FV Prime as % of Enterprise Value Implied Growth PreTax ROIC w/GW PreTaxROIC w/o GW Average ROIC w/o GW Average ROIC w/Goodwill Mid-Year ROICw/o NGW End of Year ROIC with Net Goodwill End of Year ROIC without NetGoodwill ROIC - Mid-Year Inv Capital - w/Goodwill ROIC - Mid-Year InvCapital - w/o Goodwill ROIC - End of Year Inv Capital - w/o GoodwillROIC - End of Year Inv Capital- w/Goodwill ROIC (w/o goodwill) AverageSpread w/Goodwill Average Spread w/o Goodwill Average Spread w/o NGW Endof Year Spread w/Goodwill End of Year Spread w/o Goodwill Spread -Annual (EOY ROIC - WACC) w/Goodwill Spread - Annual (EOY ROIC - WACC)w/o Goodwill Spread - Annual (Mid-Year ROIC - WACC) w/Goodwill Spread -Annual (Mid-Year ROIC - WACC) w/o Goodwill Spread - Multi-Year Avg(Mid-Year ROIC - WACC) w/Goodwill Spread - Multi-Year Avg (Mid-YearROIC - WACC) w/o Goodwill Cash/Rev Net Receivables/Rev Other CurrentAssets/Rev Operating Curr. Assets/Rev Operating Working Capital/RevsInventory/Rev Net PPE/Revs Other assets/Revs Net Other assets/RevsGoodwill/Revs Accounts Payable/Rev SG&A/Revenues Other OperatingExpenses/Revenues Other Current Liabilities/Revenue Income TaxesPayable/Rev Non Interest Bearing Current Liabs/Rev COGS/RevenuesEBITA/Revenues Depreciation/Revenues Market/Book Ratio Revenues/InvestedCapital w/GW Revenues/Invested Capital w/o GW EV (w/o Excess Cash)/InvCap (w/Goodwill) EV (w/o Excess Cash)/Inv Cap (w/o Goodwill) EnterpriseValue/Inv Capital (w/Goodwill) Enterprise Value/Inv Capital (w/oGoodwill) 3 Year TRS (CAGR) 4 Year TRS (CAGR) 5 Year TRS (CAGR) 3 YearAverage Spread (w/NGW) 4 Year Average Spread (w/NGW) 5 Year AverageSpread (w/NGW) 3 Year Average Spread (without NGW) 4 Year Average Spread(without NGW) 5 Year Average Spread (without NGW) 3 Year Average RevenueGrowth 4 Year Average Revenue Growth 5 Year Average Revenue Growth 3Year Average ROIC (with Goodwill) 4 Year Average ROIC (with Goodwill) 5Year Average ROIC (with Goodwill) 3 Year Average ROIC (without Goodwill)4 Year Average ROIC (without Goodwill) 5 Year Average ROIC (withoutGoodwill) 3 Year Average EBITA/Revenue 4 Year Average EBITA/Revenue 5Year Average EBITA/Revenue 3 Year Average Revenue/Invested Capital(w/Goodwill) 4 Year Average Revenue/Invested Capital (w/Goodwill) 5 YearAverage Revenue/Invested Capital (w/Goodwill) 3 Year Average Debt/EquityRatio 4 Year Average Debt/Equity Ratio 5 Year Average Debt/Equity Ratio3 Year Average Revenue/Employee 4 Year Average Revenue/Employee 5 YearAverage Revenue/Employee

The processing logic 720 may also be in communication with the userinterface 730. In one embodiment, the processing logic 720 may receiveinputs 732 a-732 n from the user interface 730, determine variousperformance metrics and information for a business unit of a companybased any combination of the inputs 732 a-732 n and the financial datareceived from the various data sources 710 a-710 n, and generate FVvisualizations 734 and other visualizations 736 which may display datapoints, and the like, related to the performance metrics or information.

Referring now to FIGS. 8-11, exemplary FV visualizations 734 are shown.The FV visualizations 734 may be provided with or without inputs 732a-732 n. The purpose of these FV visualizations 734 is to providegraphical depictions of the performance of a business unit relative toits peers, as well as to provide a logical vehicle for receiving inputs732 a-732 n related to the FV visualizations 734, if so included. Thesystem 700 may be configured to show a single visualization at a time,or multiple visualizations may be shown simultaneously. In alternateembodiments, a slide show of visualizations may be presented to a usershowing the implementation of alternative strategies or differentaspects of the same strategy.

Referring to FIG. 8, an exemplary FV visualization 800 is shown. In theembodiment of FIG. 8, the processing logic 720 may determine a pluralityof data points 806 based on financial data received from various datasources 710 a-710 n. Each data point 806 is based on at least one of theFV premium methodology 440 components. Data points 806 are calculatedfor a particular business unit, and each business unit may be associatedwith more than one depicted data point. A business unit may berepresentative of a whole company or a business division of a company.For example, each business unit may have a corresponding data pointdepicted for a given time period. For example, data points may becalculated for each business unit for year-end, semi-annually,quarterly, monthly, weekly, daily time period, or the Twelve TrailingMonths (TTM), as shown.

In the embodiment of FIG. 8, the visualization may graphically depictthe performance of the FV premium component of a business unit.Accordingly, each data point 806 includes a first component based on theFV premium 802, or FV prime, metric value for the associated businessunit. Additionally, each data point may include a second component basedon the economic profit 804 metric value for the associated businessunit. By plotting a graph using these two components, the visualization800 may provide a chart of FV premium at scale for the associatedbusiness unit. Preferably, the graph includes at least one data point806 for each of a plurality of business units. Optionally, thevisualization 800 may include indicia 808 indicative of the secondcomponent of the FV premium methodology 444, that portion of a company'sFV predicted by the general growth of the economy. Indicia 810indicative of an economic profit breakeven line (e.g., profit above thecost of capital) may also be included. As illustrated, the datapoint WMTrepresents Wal-Mart and shows the large current economic profitgenerated and a large EN premium, or FV prime.

Referring now to FIG. 9, another exemplary FV visualization 900 isshown. This FV visualization 900 is similar to the FV visualization 800of FIG. 8 in many respects, however, is designed to provide FV premiumversus invested capital information. In other words, this graphnormalizes the data shown in FIG. 8 per unit of invested capital in thebusiness unit. This, the data point WMT representing Wal-Mart is closelyclustered with smaller companies having similar normalized performance.First, the FV visualization 900 includes a plurality of data points 906corresponding to performance metrics and information associated withvarious business units. Each data point 906 includes at least a firstand second component. In the embodiment of FIG. 9, the first componentis based on the ratio of FV premium over invested capital (withgoodwill) 902 for the associated business unit, while the secondcomponent is based on the ratio of capitalized economic profit (EPdivided by WACC) over the invested capital (with goodwill) 904 of theassociated business unit. Also similar to the visualization 800 of FIG.8, the visualization 900 may include a first indicia 908 indicative ofthe second component of the FV premium methodology 440 for the businessunit and a second indicia 910 indicative of an economic profit breakevenline. Additionally, a third indicia 912 indicative of the relationshipbetween FV premium and market value added for the associated businessunit may also be provided. In the embodiment of FIG. 9, the thirdindicia 912 is provided to indicate an FV premium value greater thaneconomic profit over WACC for the associated business unit for datapoints to the left of the indicia 912, while the opposite is true fordata points 906 to the right of the indicia 912.

Referring now to FIG. 10, another exemplary FV visualization 1000 isshown. This visualization 1000 is similar to the FV visualization 800 ofFIG. 8 in many respects. First, the FV visualization 1000 includes aplurality of data points 1006 corresponding to performance metrics andinformation associated with various business units. Each data point 1006includes at least a first and second component. In the embodiment ofFIG. 10, the first component is based on the combination of the sum ofall direct and indirect selling expenses and all general andadministrative expenses of a company (SGA) and the invested capital 1002for the associated business unit, while the second component is based onthe ratio of FV premium over the combination of SGA and invested capital1004 of the associated business unit. Thus, one may quickly visualizethe relative Future Value generated per unit of expense and capitalinvested with larger companies towards the right of the chart.Optionally, the visualization 1000 may include a first indicia 1008indicative of a positive second component 1004.

Referring now to FIG. 11, another exemplary FV visualization 1100 isshown. This visualization 1100 includes a plurality of bars 1106corresponding to performance metrics and information associated withvarious business units. In particular, each bar 1106 represents thethree components of the FV premium methodology 440 for the associatedbusiness unit. Preferably, each component of the bar 1106 is visuallydistinct from the other components. For example, the first component ofthe FV premium methodology, or that portion of FV based on an operatingadvantage/disadvantage 1110 may be displayed in a first manner, such asin a first color. Similarly, the second component of the FV premiummethodology 1112, or that portion of FV attributable to the growth ofthe economy in general, may be provided in a second manner, while thethird component of the FV premium methodology 1114, or the FV premiumcomponent, may be provided in a third.

As described above, the tool may also include one or more additionalvisualizations 736 for displaying performance metrics and information,such as the performance metrics included in Table 1.0 above, associatedwith various business units. Preferably, the additional visualizationsare provided with controls that allow the user to customize thevisualization by selecting the time period and performance metricsdisplayed in the visualization. An exemplary additional visualization1200 is shown in FIG. 12. In the embodiment of FIG. 12, thevisualization is designed to provide information for a particularperformance metric for each of a plurality of business unit, Thevisualization 1200 may include a bar 1204 indicative of a selectedmetric for each of a plurality of business units 1202. Controls may alsobe provided to allow the user to select the time period 1220 andperformance metric 1222 being displayed using pull-down menus.Optionally, additional controls or active buttons that allow the user tosort 1210 the business units 1202 may also be provided. In oneembodiment, buttons are provided for toggling the information displayedbetween relative values 1212 and absolute values 1214.

Referring to FIG. 13, an exemplary additional visualization 1300 forproviding historic information for a particular performance metric for aparticular business unit is shown. The visualization 1300 may include abar 1304 indicative of a selected metric for a particular time period1302 of the business unit. Optionally, the value 1306 of the performancemetric may also be displayed. Controls may be provided to allow the userto select the business unit 1320 and performance metric 1322 beingdisplayed. Optionally, additional controls that allow the user to togglethe information displayed between relative values 1312 and absolutevalues 1314. Optionally, controls may be included to change the daterange of the historical data displayed on the visualization.

Referring to FIGS. 14-17, addition visualizations 736 may also beprovided with controls that allow the user to completely customize thevisualization. For example, visualizations 736 may be provided to allowthe user to graph a performance metric versus a performance metric, aratio of performance metrics versus a performance metric, a performancemetric versus a ratio of performance metrics, and two ratios ofperformance metrics. The visualizations 736 may also allow the user toselect multiple time periods for which data points are calculated. Inone embodiment, the visualization 736 includes multiple data points foreach business unit. For example, data points may be determined for eachof a plurality of time periods. Plotting data points for each of aplurality of business units across time allows an individual to quicklyand easily determine trends, strategies, and efficiencies for aparticular group of related business units. While the embodiments ofFIGS. 14-17 relate to X-Y scatter charts, it should be apparent to oneof ordinary skill in the art that the principles described herein couldbe applied to generate any type of chart, graph or visualization, suchas bar graphs, bubble graphs, and the like.

Referring to FIG. 14, an exemplary additional visualization 1400 thatallows a user to customize a graph of a performance metric versus aperformance metric is shown. The visualization 1400 includes a pluralityof data points 1406 associated with a particular business unit. In theembodiment of FIG. 14, each data point 1406 includes a first componentindicative of a first performance metric or variable 1402 for a businessunit and a second component indicative of a second performance metric orvariable l404 for a business unit and a third component indicative ofthe time period to which the first and second metrics correspond. Theuser may specify the performance metric indicated by the first andsecond components via the respective controls 1430 and 1440 which mayinclude pull down menus. Performance metrics may be selected from, butnot limited to, invested capital (with or without goodwill), marketvalue added, market capitalization, shareholder equity, NOPLAT, WACC,and revenue. In one embodiment, any metric in Table 1.0 may be selected.In response to the selection of components by the user, the system 700may retrieve financial data associated with the business unit anddetermine the data points 1406 based on the selected components. In oneembodiment, the data may be retrieved from a table includingpre-calculated data for each available performance metric.Alternatively, of in addition to, the metrics may be calculated afterthe selection is made.

Optionally, controls may also be provided that allow the user to togglethe information displayed between relative values 1412 a, 1412 b andabsolute values 1414 a, 1414 b for each of the performance metrics.Thus, the data may be shown at scale or normalized to a ratio.Preferably, the visualization includes a plurality of data points 1406for each business unit, where each data point 1406 corresponds to a timeperiods 2001, 2003, and the twelve trailing months. In the embodiment ofFIG. 14, the visualization 1400 includes three data points 1406 for eachbusiness unit, each calculated for a specific time period. Trend lines1408 may also be included to connect data points for a particularbusiness unit. Controls may also be provided to allow the user to selecta time period for the first time period 1420, second time period 1422,and third time period 1424. In response to the selection time periods,the system 700 may determining new data points 1406 and trend lines 1408corresponding to the selected metrics and time periods and update thevisualization 1400 accordingly.

Referring to FIG. 15 another exemplary additional visualization 1500 isshown. In the embodiment of FIG. 15, the visualization 1500 includes aplurality of data points 1506 associated with a particular business unitand allows a user to customize a graph of a ratio of performance metricsversus a performance metric. In the embodiment of FIG. 15, each datapoint 1506 includes a first component indicative of a performance metric1502 for a business unit and a second component indicative of a ratiobetween performance metrics 1504 for a business unit. The user mayspecify the performance metric indicated by the first components via thecontrols 1530. Similarly, the user may specify each performance metricsof the ratio 1504 via the controls 1540 a and 1540 b for the numeratormetric and denominator metric, respectively. Optionally, controls mayalso be provided that allow the user to toggle the information displayedbetween relative values 1512 a, 1512 b and absolute values 1514 a, 1514b for any of the performance metrics or ratio. Similarly to thevisualization 1400 of FIG. 14, the visualization preferably includes aplurality of data points 1506 for each business unit, where each datapoint 1506 corresponds to a time period. For example, the visualization1500 may include three data points 1506 for each business unit, eachcalculated for a specific time period, as well as controls that allowthe user to select the first time period 1520, second time period 1522,and third time period 1524. Optionally, additional controls for periodsand data points 1506 for those additional time periods may be included.

Similarly, FIG. 16 shows another exemplary visualization 1600 forgraphing of a performance metric versus a ratio of performance metrics.In the embodiment of FIG. 16, each data point 1606 includes a firstcomponent indicative of a performance metric 1604 for a business unitand a second component indicative of a ratio between performance metrics1602 for a business unit. Again, the user may specify the performancemetric indicated by the first component 1604 via the control 1630 andeach performance metric of the ratio 1602 via the controls 1640 a and1640 b. The selected performance metrics also are displayed as labels onthe axes of the chart. Optionally, controls may also be provided thatallow the user to toggle the information displayed between relativeFIGS. 1612 a, 1612 b and absolute FIGS. 1614 a, 1614 b for any of theperformance metrics or ratio. Optionally, the visualization 1600 mayinclude three or more data points 1606 for each business unit, eachcalculated for a specific time period, and rend lines 1608 connectingthe data points. Controls are provided that allow the user to select atime period for the first time period 1620, second time period 1622, andthird time period 1624.

Finally, another exemplary visualization 1700 for graphing of a ratio ofperformance metrics versus a ratio of performance metrics is shown inFIG. 17. In the embodiment of FIG. 17, each data point 1706 includes afirst component indicative of a first ratio of performance metrics 1702for a business unit and a second component indicative of a second ratiobetween performance metrics 1704 for a business unit and corresponds toa selected time period. Again, the user may specify either performancemetric of the first ratio 1702 via the controls 1740 a and 1740 b andeach performance metric of the second ratio 1704 via the controls 1730 aand 1730 b. Optionally, controls may also be provided that allow theuser to toggle the information displayed between relative FIGS. 1712 a,1712 b and absolute FIGS. 1614 a, 1614 b for any of the ratios ofperformance metrics. The visualization 1700 may also include three ormore data points 1706 for each business unit, each calculated for aspecific time period, as well as controls that allow the user to selecta time period for the first time period 1720, second time period 1722,and third time period 1724.

Based on the teachings described herein, others of ordinary skill in theart will appreciate other applications of the system, apparatus andmethods in accordance with this invention. Accordingly, it is thereforeintended that the foregoing detailed description be regarded asillustrative rather than limiting, and that it be understood that it isthe following claims, including all equivalents, that are intended todefine the spirit and scope of this invention.

1. A method for assessing the performance of a company, comprising:receiving financial data about the company and an index value indicativeof the economic growth for at least one industrial sector of a countryrelevant to the company; determining a current value and a future valuewhich combined make up an enterprise value of the company; decomposingthe future value into a plurality of future value components, whereinthe plurality of future value components include a future value (FV)premium component comprising the difference between the future value ofthe company and a sum of the economy component and an operatingadvantage component; and displaying at least one of the future valuecomponents.
 2. The method of claim 1, wherein the plurality of financialdata includes an invested capital value, and the operating advantagecomponent that is calculated as a function of the invested capitalvalue.
 3. The method of claim 2, wherein the plurality of financial dataincludes a Weighted Average Cost of Capital (WACC) value, and whereinthe operating advantage component is calculated by dividing an economicprofit of the current value for the company by the WACC, the economicprofit of current value being equal to a NOPLAT value less a capitalcharge value, the NOPLAT value being indicative of a net operatingprofit less adjusted taxes value for the company, the capital chargevalue being equal to the invested capital value of the companymultiplied by WACC value.
 4. The method of claim 1, wherein thedisplaying further includes displaying an indicia of a Gross DomesticProduct (GDP) breakeven line.
 5. The method of claim 1, wherein thedisplaying at least one of the future value components further includesdisplaying a FV premium component.
 6. The method of claim 5, wherein thedisplaying further includes displaying an indicia of the amount ofmarket value added (MVA) with the FV premium component.
 7. The method ofclaim 2, wherein the displaying at least one of the future valuecomponents further includes displaying an economy component, theoperating advantage component, and a FV premium component.
 8. The methodof claim 1 further comprising: receiving financial data about aplurality of additional companies; determining a current value and afuture value which combined equal an enterprise value for each of theplurality of additional companies; decomposing each future value of theplurality of additional companies into a plurality of future valuecomponents, wherein the plurality of future value components includes aneconomy component that defines an implied amount of growth of thecompany expected by the growth of at least one industrial sector of theeconomy relevant to the company; and displaying at least one of thefuture value components for at least one of the plurality of additionalcompanies.
 9. A method for assessing the performance of a company,comprising: receiving financial data about the company; determining acurrent value and a future value which combined make up an enterprisevalue of the company; decomposing the future value into a plurality offuture value components, including a future value premium component; anddisplaying at least one of the future value components.
 10. The methodof claim 9, wherein the plurality of financial data includes an investedcapital value, and an operating advantage future value component that iscalculated as a function of the invested capital value.
 11. The methodof claim 10, wherein the plurality of financial data includes a WeightedAverage Cost of Capital (WACC) value, and wherein the operatingadvantage component is calculated by dividing an economic profit of thecurrent value for the company by the WACC, the economic profit ofcurrent value being equal to a NOPLAT value less a capital charge value,the NOPLAT value being indicative of a net operating profit lessadjusted taxes value for the company, the capital charge value beingequal to the invested capital value of the company multiplied by WACCvalue.
 12. A computer-implemented method for analyzing the relativeperformance of a business unit of a company, the method comprising:receiving publicly available historical financial data in an electronicreadable format about a plurality of business units from a data source;providing controls for selecting a first variable from a plurality ofvariables, wherein the first variable is a ratio of two independentlyselected variables, the first variable being associated with a firstcoordinate; providing controls for selecting a second variable from theplurality of variables, wherein the second variable is a ratio of twoindependently selected variables, the second variable being associatedwith a second coordinate; calculating with a data processor a pluralityof ratios of financial performance measures based on the receivedfinancial data; selecting a business unit from the plurality of businessunits and generating a plurality of data points based on the receiveddata and calculated performance measures for the selected business unit;and displaying the plurality of data points on a graph.
 13. Thecomputer-implemented method of claim 12, further comprising displaying asecond graph of a first performance metric versus a second performancemetric.
 14. The computer-implemented method of claim 13, furthercomprising providing user interface controls to allow selection of aninput indicative of the first performance metric or the secondperformance metric.
 15. The computer-implemented method of claim 12,further comprising displaying a second graph of a ratio of a firstperformance metric to a second performance metric versus a thirdperformance metric.
 16. The computer-implemented method of claim 15,further comprising providing user interface controls to allow selectionof an input indicative of the first performance metric, the secondperformance metric, or the third performance metric.
 17. Thecomputer-implemented method of claim 12, further comprising displaying asecond graph of a first performance metric versus a ratio of a secondperformance metric to a third performance metric.
 18. Thecomputer-implemented method of claim 17, further comprising providinguser interface controls to allow selection of an input indicative of thefirst performance metric, the second performance metric, or the thirdperformance metric.
 19. The computer-implemented method of claim 12,further comprising displaying a second graph of a first ratio between afirst performance metric and a second performance metric versus a secondratio to a third performance metric and a fourth performance metric. 20.The computer-implemented method of claim 19, further comprisingproviding user interface controls to collect an input indicative of thefirst performance metric, the second performance metric, the thirdperformance metric, or the fourth performance metric.
 21. Thecomputer-implemented method of claim 12, wherein the received historicalfinancial data further includes a Gross Domestic Product (GDP) valueindicative of the GDP for a country and the displaying further includesdepicting on the graph an indicia indicative of a GDP breakeven lineassociated with an implied amount of growth of the company attributableto the growth of the economy in general and based on the GDP value. 22.The computer-implemented method of claim 12, wherein the plurality offinancial data includes an invested capital value.
 23. Thecomputer-implemented method of claim 22, wherein the plurality offinancial data includes a Weighted Average Cost of Capital (WACC) value,and wherein the operating advantage component is calculated by dividingan economic profit of the current value for the company by the WACC, theeconomic profit of current value being equal to a NOPLAT value less acapital charge value, the NOPLAT value being indicative of a netoperating profit less adjusted taxes value for the company, the capitalcharge value being equal to the invested capital value of the companymultiplied by WACC value.
 24. The computer-implemented method of claim12, wherein at least one of the plurality of ratios of financialperformance measures includes a future value component, the future valuecomponent selected from the group consisting of: (i) an economycomponent that defines an implied amount of growth of the companyattributable to the growth of the economy in general, (ii) an operatingadvantage component that is calculated as a function of the investedcapital value, and (iii) a future value (FV) premium componentcomprising the difference between the future value of the company and asum of the economy component and the operating advantage component.